If you missed out on the zero down or interest only or creative financing that were the norm before last fall to get into your own house, Uncle Sam has a gift for you.
If you are a U.S. citizen, have not owned a home in the past 3 years, earn less than $150,000 (married and $75,000 single), purchase your house or condo or town home in 2009, live in this house as your primary residence, and spend $80,000 on the house, you will qualify for the full $8,000 tax credit.
If your new house costs less than $80,000, your credit will be limited to 10% of the purchase price. If you earn between $150,000 and $170,000 (married and $75,000 to $90,000), you qualify for a partial tax credit.
Actually the earned income I referred to is your Adjusted Gross Income, the bottom line of page 1 of your 1040 tax form. Your AGI includes all income - your W2 earnings, your self employed earnings, and $ that your $ made such as dividends and interest, etc.
You need to live in this new house as your primary residence for 3 years. Do not worry, Uncle Sam will not required repayment of this credit. I wonder why this rule, if it has no teeth.
A tax credit is applied toward your tax liability on page 2 of your 1040. If you are due a refund from the IRS, the $8,000 will be added to your refund! If you owe, that balance is covered by part or all of the $8,000. You will owe if your tax liability exceeds $8,000.
I have heard there are lenders who will cover the $8,000 through a side loan which you can repay next Spring. So, maybe you can still buy a house with zero down.
'til later
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